Three-Quarters of Americans Have Seen Utility Bills Jump 25% or More Over the Last Year
We have been hearing about high energy costs for what feels like ages. However, according to most Americans, utility bills are still on the rise. A recent GOBankingRates survey found that nearly three-quarters of recipients claim their utility bills have increased by at least 25% in the past year.
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While the largest portion (over 40%) reported a 25% increase, more than 22% said their utilities have increased by 50%. And nearly 10% said their utility bills have more than doubled in the past year.
So, is any relief on the way? I asked the experts for their insights and tips to help reduce your utility bills.
Why the Increase in Utility Bills?
Utility prices are rising for many reasons, so it’s difficult to blame a single cause. However, one of the most significant factors in the rise of utility bills is increased natural gas prices. This dramatically impacts utility bills as natural gas generates about 40% of Americans’ electricity.
According to NPR reporting, natural gas inventories are low, leading to a price increase of about 300% in the past few years alone. At the same time, the U.S. has been exporting natural gas to European countries where prices are even higher than they are here.
Those countries previously relied on Russia for natural gas but can no longer do so after Russia’s invasion of Ukraine led to sanctions.
“In Europe, electricity prices are also closely tied to the cost of natural gas, and the impact of the war between Russia and Ukraine is being felt more closely in that region,” said Greg Fasullo, CEO of Elevation. Fasullo added that prices could continue to rise. “According to the National Energy Assistance Directors Association, the average cost of heating a home this winter is predicted to increase by 17% from the previous year,” he said.
How long the higher prices will last depends mainly on these geopolitical pressures. If the West eases sanctions on Russia, it may turn on the natural gas tap once again. However, Russia hasn’t ceased its assault on Ukraine, and there is no sign of a return to normalcy. Only if the situation improves can we expect an easing of energy tensions in Europe.
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How the Increase in Utility Bills Affects Americans
We know that utility bills have increased substantially, and the trend may continue, but what is the real-world impact on Americans? Naturally, it is significant. However, the cost burden is not one that all Americans share equally.
For example, a report from the National Low Income Housing Coalition says that low-income households spend an average of 7.2% of their income on energy costs. The report says that that is more than double the median cost burden of 3.5% for all families. This means that for low-income families, rising utility costs lead to difficult choices between paying for electricity or other essential expenses like rent, transportation and healthcare.
Older Americans may also be at risk due to rising utility bills. Seniors are more likely to live on fixed incomes. Additionally, many seniors have medical conditions that require heating or cooling to maintain a healthy environment.
While rising utility costs are a burden for every American, they are a more significant concern for some than others. For those groups, it’s necessary to assist as needed.
What You Can Do To Manage Your Utility Bills
While we are limited in how much we can reduce our utility costs individually, we can still take specific steps to mitigate rising costs. “The easiest way to reduce your utility bill as an individual is to upgrade major appliances to energy efficient models, like those with strong EnergyStar ratings, and use smart energy management software to consume electricity during off-peak hours if you are on a time-of-use rate,” said Matt Grace, head of growth at OptiWatt.
Grace says this matters because peak pricing can be much higher than off-peak pricing. “Peak pricing is 3-4 times the price of off-peak in most areas, and sometimes higher if you are on a real-time rate like that offered by ComEd. Even if you aren’t on time-of-use yet, the nation’s utility providers are trending in that direction so it is wise to prepare.”
If you want to reduce your energy bills, here are a few other tips:
- Switch to energy-efficient lighting: If you have old incandescent bulbs in your home, swap them out for newer LED lighting. This can significantly reduce your energy bill. Look for the ENERGY STAR label when purchasing new appliances and bulbs.
- Install a smart thermostat: Smart thermostats like Nest Learning Thermostat or Honeywell Evohome are a great way to heat and cool your home more efficiently. They give you much greater control over your home temperature. Plus, they let you only heat or cool specific rooms at certain times.
- Improve insulation: Insulation might be a low-tech solution, but it’s still critical. Sealing leaks in your insulation can significantly reduce your energy costs.
- Use water-saving fixtures: Installing low-flow showerheads, faucets and toilets can help conserve water and reduce water bills.
Advocacy and Policy Solutions
Addressing rising utility bills requires help from policymakers, utilities and individuals alike. Low-income households and vulnerable populations are often the hardest hit by rising utility bills. Increasing funding for energy assistance programs like the Low Income Home Energy Assistance Program (LIHEAP) can provide critical support to help households pay their energy bills and improve energy efficiency.
Utilities can also address rising prices by investing in renewable energy sources like solar and wind. This can help utilities diversify their energy portfolio and reduce their reliance on fossil fuels, lowering consumer energy costs.
Implementing energy-efficient building codes can also help reduce energy waste and lower utility bills for homeowners and businesses. Building codes that require energy-efficient design and construction can help promote sustainable and affordable housing. This can benefit both individuals and the environment.
Educating individuals and households on the benefits of renewable energy can also encourage people to take action. In turn, they can reduce their energy usage and aid in the sustainable energy transition. Policies like tax credits, rebates and incentives for energy-efficient upgrades can incentivize individuals and businesses to invest in energy-saving measures.
The Bottom Line
Utility costs have been higher for at least the past year, and geopolitical pressures show no signs of easing in the near future. This means Americans could face even higher energy costs in the months ahead. In the meantime, you can take steps to decrease your energy bills, like switching to energy-efficient lighting and improving your insulation.
Hopefully, as political tensions ease, energy prices will be relieved. For now, though, the best we can do is reduce our utility costs.
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